Greenbrier, GE Discussing Potential Changes to Key Railcar Contract

The Greenbrier Companies and General Electric (GE) Railcar Services Corporation are discussing potential changes to a long-term contract that Greenbrier said represents 75 percent of its current new railcar manufacturing backlog.

GE has advised Greenbrier that it wants to substantially reduce, delay or cancel railcar deliveries under the contract, which calls for the purchase of 11,900 new tank and covered hopper cars over an eight-year period. Greenbrier believes the contract contains adequate protection in the event of an attempted cancellation or renegotiation of railcar deliveries.

Greenbrier says it made substantial capital investment and devoted design and engineering resources before railcar deliveries to GE began in December 2008. Under the contract, approximately 500 railcars are currently scheduled for delivery in the 2009 fiscal year, with the balance to be delivered over the next seven fiscal years.

Last month, Greenbrier announced a series of cost-cutting measures including reductions in workforce and plans to consolidate new railcar manufacturing production in North America. The company said additional reductions in work force and cost cuts will be required if production under the GE contract is substantially modified.